Month: October 2014

The value of a college education is undeniable. However, the cost to attend college has been steadily increasing over the last few decades. The cost has increased more than four times faster than inflation in that same period of time. Some university’s tuition has risen to over $60,000 a year for a four year degree.

The returns on the large cost of attending college vary depending on the degree that someone earns. A person that graduates with a degree in computer science is likely to make more than $1.7 million more than someone with no degree over the course of 20 years. The opposite of this is that a person with a degree in humanities and English will be more than $132,000 behind someone with no degree over that same span of time. It is believed that if universities had a greater incentive in the success of their students after graduation they would push them to more financially satisfying degrees. This discrepancy would possibly begin to correct itself if the job market were to improve.

Another way to improve this discrepancy is to lower the overall cost of college. One of the main reasons that the price has increased so much is that tuition is going to things other than education. These include new dormitories, athletics, and numerous administrators. Another method that is starting to be used to lower the cost of college is online classes. The downside to online courses is that many American universities do not give respectable degrees to those students that took online courses.

Oregon proposed a program that would allow students to attend state colleges tuition free. This proposal, called the “Pay It Forward, Pay It Back” program would have students go through their higher education without the stress of taking out loans and racking up a lot of interest and massive debt. They would do this by paying the state back a small portion of their income over the course of about 20 to 25 years. After graduating, the student would pay 0.75% of their yearly income per year of schooling. This means a 4 year student would end up paying 3% interest for the time that they are paying. This interest would be put into a trust fund that would help other students in the future.

There are some problems with this proposed plan. One problem is the massive cost that the states would have to pay to start this program. Washington looked into the feasibility of this plan for their state and determined that it could cost as much as 1.4 billion dollars a year. Also, because the payment plan is based on the income of the students after they graduate, it may drive the top students away from state schools if they believe that a portion of their possibly higher income will be taken away from them over the next 20-25 years.

Although this plan is not perfect, it may be a step in the right direction to help students pay for their education without amassing a large amount of debt.

College costs have been steadily increasing since the 1970’s. As of late, the costs have continued to sore at an even faster pace. Accompanying the rise in college education costs is student loan debt. In fact, the recent 2012 grad owes over $29,000 in student loans. This is up from more than just over $9,000 in 1993. With this increasing burden on America’s younger generation it would seem logical to lower the federal interest rate on student loans.

Current students are paying about 4.66% interest on student loans, although there are many others who have interest rates which are locked in at above 9%. It seems obvious that higher education is vital to America’s economical future. Having a well educated public defines a society and an economy. Despite this however, lawmakers are rejecting proposals to lower federal student loan interest rates. In fact, government seems to believe banks should pay lower interest rates on federal loans than students. Banks pay a rock-bottom interest rate of only 0.75%. College costs are a huge issue plaguing the prospective college student, but it seems the government prefers to see banks prosper than young Americans invest in their own futures.

As many Americans struggle with paying back college debt the government seems to turn a cold shoulder. College costs and debt should never be a matter of politics; yet as many struggle to pay back debts, government struggles to see the problem in favoring banks over students.

September 9th is the day that US News and World Report the rankings for “America’s Best Colleges.” This ranking is a way for schools to measure themselves on how they compare to the other elite colleges. The problem is that this ranking is based off of what US News defines as ‘best’. Their ranking focuses on the individuals these schools let in and not what the students leave with after their time in college. The ranking is based heavily off of what percentage of students get in and what their average SAT score is. With this being said, the easiest ways for a school to better their rank is to “raise SAT benchmarks” and to reject more applicants.

On the other side of things, Times has released their own rankings and do not focus on a school’s prestige but instead on “economic diversity.” They started off by selecting colleges with a four-year graduation rate over 75%. This alone is only 98 four-year colleges out of 3,100 in the country. The rest of the ranking was determined by the “percentage of students who received a Pell grant and the net price of attendance.”

The need for schools to climb the rankings “may pay off for colleges” but in the long run hurts the students and their families. In the end, neither of these rankings do students any justice. They may determine which college has the best incoming students but that does not show if they have taught their students anything while at school. Ranking colleges will do “little to expand educational opportunity” for the majority of students whose school is not on either list.

The income-based repayment program is a great response to the difficulties people face when pursuing a career in public services where usually a college degree is mandated. A low income and high student loan truly brings out the question whether or not college is worth it? With this program capping the percentage of one’s income one can pay on student loans leans the answer towards yes; however, only federal loans are covered. Often the cost of education causes many students to take out private loans with high interest rates and there really is not much help for those people. Articles about people suffocating in their student debt and retirees losing financial stability because of student loans still have the worth of college being questioned.

Education is key. Education is the most consistent way to create a financially stable life and possibly family. The lottery is always a fall back. In order for America to retain its image in the world it needs to be filled with educated citizens furthering, promoting, and expanding its economic success. The government needs to be aiding younger generations with programs such as the IBR. They also need to do more because the importance of furthering education should not be competing with a price. High school graduates should not be wondering, “is college worth it?”

Over the past several decades the cost of college education has rose to 13 times the cost that it used to be, that’s a 1,225% increase. An increase that is much more than the rate of inflation and food costs over the same amount of time.

Representative Robert Hurt of Virginia came to the realization that families need some type of program to have access to financial planning for the increasing costs of college education. There are already programs called “529 Plans”, that are set up to help families learn how to properly save and invest for college. Thus his creation was the “College Savings Enhancement Act” which would allow the state-run prepaid college savings plans the freedom to invest more broadly, allowing them to be able to meet their obligations to the families purchasing their plans. Not only does Virginia offer college savings plans but so do several other states, including Pennsylvania.

This act is currently moving through congress, and if it is passed it will solve the problem that the “529 plans” are experiencing. These plans also include the prepaid plans, and it also provides tax-advantaged options. The problem is that because of these plan’s classification, they are unable to invest in ways to maximize returns and meet the obligations to their customers.

If this act passes through congress it will make higher education more accessible for all states that have adopted the “529 Plans” and also convince other states who do not have it to follow suit.

When it comes to the costs of higher education, one thing everyone can agree with is that it is getting out of hand. In the last year tuition and fees have increased 8.3%, which more than doubled the rate of inflation. This increase was not a surprise. It followed the trend of increasing tuition costs that has been occurring for the last decade at an average rate of 5.6%. On top of the high costs, a college degree has become a necessity to obtain a decent career. The only solution for students has become borrowing. The federal government is lending over $100 billion dollars a year to students. Private loans on top of that have left many graduates unable to keep up.

Kevin Carey, a director of Education Sector, a think tank in Washington D.C, compares entering college to getting smuggled across the border. He says “you can get to the promised land if you try hard enough, but you arrive in a state of indentured servitude to the shady operators who overcharged you for the trip.” The image he portrays of the costs of higher education is dark and striking, but realistic. Carey acknowledges the hard work the government is putting in trying to mitigate costs, but doesn’t see it as progress when the tuition fees are still increasing astronomically.

The problem is obvious, but the solutions are vague. Carey sees the high costs as an “inevitable consequence of the way higher education system is currently design.” The system is broken and “static.” It is not changing and developing with the needs of the time. Most higher education institutions are founded in their old ways and traditions. They do not desire to change. Carey believes the government needs to threaten the institutions for reformation to ever occur. The institutions are benefiting themselves when they need to put students and public interest first.